Indirect Land Use Change

May 12, 2009

Since the publication of a controversial study last year (Searchinger et al 2008), a new term has entered the policy debate around biofuels—indirect land use change (ILUC). The debate is focused on whether the carbon intensity of fuels like ethanol can or should include a penalty for theoretical indirect, economic effects. Land use is just one of many indirect effects that could also increase the greenhouse gas emissions of different fuels, including gasoline.

In December 2008, the European Union decided not to include an ILUC penalty against biofuels. More recently, in April 2009, the California Air Resources Board (ARB) voted for regulations that would add an "indirect land use change" penalty to biofuels as part of its Low Carbon Fuel Standard. ARB also agreed to investigate the indirect effects of other fuel types. In addition, the U.S. Environmental Protection Agency is expected to release a proposed rule that could include an indirect land use change penalty for biofuels in determining that fuel's capacity to reduce greenhouse gas (GHG) emissions compared to gasoline.

The theory: ILUC theory uses speculative models and incorrect assumptions in an attempt to blame U.S. farmers for deforestation in Brazil. According to the theory, corn used for ethanol displaces other crops, like soybeans. This in turn, causes farmers in other countries, such as Brazil, to cut down rainforests to grow soybeans and fill the demand.

The theory is controversial and no consensus in the scientific community as to its validity has been achieved. The data/facts actually contradict the theory. Many scientists challenge the credibility of economic models used to approximate the theoretical values of GHG missions projected from ILUC. In fact, the European Union believes that it is necessary to study and test this theory before including ILUC penalties in any climate change regulations.

The penalty: Advocates of ILUC theory argue that biofuels producers should be penalized for the stored carbon that is "indirectly" released due to international market forces related to the production of ethanol -- in this case, from deforestation in the Amazon. Essentially, these advocates believe that farmers and ethanol producers should be held accountable for the unrelated actions of people on the other side of the globe over whom they have no control or any relationship with based on economic modeling.

Lifecycle analysis: A fuel's carbon intensity value is calculated thorough a tool called lifecycle analysis (LCA). The practice of LCA is governed by the International Standards Organization under ISO 140140 and 14044. So-called "wells to wheels" or "field to wheels" LCA includes all inputs and all outputs associated with the production of the fuel and its use to produce a carbon intensity value. Any land use changes directly related to the production of biofuels are ALREADY included as part of its carbon intensity value. In fact, for a fuel to qualify for the Renewable Fuel Standard, the fuels' feedstock must be renewable biomass, meaning the feedstock must be produced on land that was "nonforested" on Dec. 17, 2007.

As such ILUC is not included in LCA, because it is not related to the production of fuel's supply chain – "wells to wheels" or "fields to wheels." In fact, more than 100 scientists wrote to the California ARB urging them to delay implementation of the ILUC penalty against biofuels citing the lack of science supporting its model.

The theory of ILUC is built on two main assumptions:

Corn used for ethanol production will lead to large decreases in U.S. grain export.

Ethanol production will increase deforestation in the Amazon.

Both have been proven to be empirically false. Since 1998, corn exports have remained at 1.5-2.5 billion bushels sold abroad each year and soybean exports reached record levels last year. In addition, according to the National Institute of Space Research, deforestation in the Amazon has declined sharply just as American biofuels production doubled. In 2004, 10,588 square miles of the Amazon was deforested and in 2008, that number dropped to 4,621 square miles.

Growth Energy is a group committed to the promise of agriculture and growing the U.S. economy through cleaner, greener energy. Its members recognize America needs a new ethanol approach. Through smart policy reform and a proactive grassroots campaign, the group promotes reducing GHG emissions, expanding the use of ethanol in gasoline, decreasing dependence on foreign oil, and creating American jobs at home.